Automotive Magnets

Background

An Automotive company experienced a significant increase in price of Rare Earth Magnets that required a review of the entire sourcing strategy. The key cause of the increase cited by suppliers was an astronomical price increase of a principle raw material Neodymium, a rare earth element, the supply of which is controlled by China. Dragon Sourcing was commissioned to investigate the current price hike, the role of China and how to mitigate future risks.

Approach

Primary Research

Conducted structured interviews with buyers, suppliers and industry experts to:
Understand the Neodymium and Rare Earth Magnet market, Map the value chain of the industry and the role of different players involved, Understand the role of the Chinese government and its impact on the prices

Secondary Research

Secondary Research: Conducted online research including trade bodies to:
Clarify the market dynamics of the industry, Determine the demand from different applications

Supplier Research

Supplier Research: Conducted a request for information process with suppliers both in China and in the rest of the world, to validate the primary and secondary research.

Results

Recommended the best sourcing strategies based on a full understanding of the supply chain players.
Proposed the optimum contract length and structure to mitigate future price increases